The pair of NZD/USD was already started weak into the Reserve Bank of New Zealand disclosure today, and the lift in asset purchases has seen a fast drop.
The RBNZ voted to leave the cash rate on hold for the time being. However, they adjusted the Large Scale Asser Purchase rate to above the 100bn range, which was more than expected. And clearly, the market has taken it has a negative sign for the NZD/USD.
There were some positive headlines to note, including the fact that the economy and employment are recovering faster than expected. However, the other side issue is that parts of New Zealand have gone back into lockdown thanks to some unknown cases of COVID.
Otherwise, it was a bit of a mixed bag, and that’s what happened to the pair of NZD/USD. There was a fair bit of downside risk, based on the big run-up and the mixed outlook. So it’s not surprising to see a sharp fall. That said, the price has recovered a little off the lows so far.
The NZD/USD Technicals
The breakthrough the 0.6600 level has already come this morning, and as mentioned, the price was looking soft going in.
Price did crash through 0.6550 before bouncing back, and it is currently sitting in that region.
There is some chance we see some more falls towards the next fundamental level of 0.6500, but at the same time, we’ve had a fair bit of volume take place in that 0.6550-0.6600 region, as you can see on the charts, and that often leads to an area of consolidation.
A break under that 0.6500 region, would be the next big bearish move. And a lot will depend on how the next few days play out in Auckland, where the latest COVID cases have shown up.
